ANNOUNCEMENT OF FINAL RESULTS
FOR THE YEAR ENDED 31ST MARCH, 1999
The Board of Directors of Shun Cheong Holdings Limited (the "Company") announces the audited consolidated results of the Company and its subsidiaries (together, the "Group") for the year ended 31st March, 1999 which are summarised as below:
RESULTS
Year ended 31st March,
1999 1998
Note HK$’000 HK$’000
Turnover 1 602,346 497,087
========== ==========
Operating profit 21,453 19,700
Share of profit (loss) of
associated company 4 (9)
---------- ----------
Profit before taxation 21,457 19,691
Taxation 2 (3,399) (2,298)
---------- ----------
Profit after taxation 18,058 17,393
Minority interests (33) (390)
---------- ----------
Profit attributable
to shareholders 18,025 17,003
Dividend 3 (4,906) (3,250)
---------- ----------
Profit for the year retained 13,119 13,753
========== ==========
Earnings per share 4 5.55 cents 5.24 cents
========== ==========
Notes:
1. Turnover
Turnover comprises (i) the value of revenue certified under long-term installation contracts, (ii) the entire billings of maintenance work orders completed during the year, and (iii) the value of sales of goods in the normal course of business, which is recognised when the merchandise is delivered and the related title has passed to customers or services are rendered.
2. Taxation
The Company is exempted from taxation in Bermuda until 2016. Hong Kong profits tax has been provided at the rate of 16% (1998 - 16.5%) on the estimated assessable profit arising in or derived from Hong Kong.
Deferred taxation is provided for under the liability method, at the current tax rate, in respect of the timing differences between profit as computed for taxation purposes and profit as stated in the financial statements, except where it is considered that no liability will arise in the foreseeable future. A deferred tax asset is not recognised unless the related benefits are expected to crystallize in the foreseeable future.
Taxation (charge) credit comprised:
1999 1998
HK$’000 HK$’000
Company and subsidiaries
Hong Kong profits tax
- Current year (1,255) (1,833)
- Over-provision in prior year 176 446
Deferred taxation (2,320) (911)
Share of taxation of
associated company - -
------- -------
(3,399) (2,298)
======= =======
3. Dividend
Year ended 31st March,
1999 1998
HK$’000 HK$’000
Proposed final dividend of
HK$1.5 cents (1998 - HK$1 cent)
per share 4,906 3,250
======= =======
The above final dividend is calculated on the basis of 327,041,600 shares of the Company in issue.
4. Earnings per share
Earnings per share has been calculated using the audited consolidated profit attributable to shareholders for the year of approximately HK$18,025,000 (1998 - profit of approximately HK$17,003,000) and the weighted average number of 325,041,600 (1998 - 324,287,850) shares in issue during the year ended 31st March, 1999.
5. Movements in retained profit
Year ended 31st March,
1999 1998
HK$’000 HK$’000
Balance at the beginning of year 14,346 492
Profit retained for the year 13,119 13,753
Capital reserve arising from
acquisition of a minority
interest in a subsidiary - 101
------- -------
Balance at the end of year 27,465 14,346
======= =======
DIVIDEND
The Directors will recommend the payment of a final dividend of HK$1.5 cents per share (1998 - HK$1 cent) for the year ended 31st March, 1999 be payable on or before Thursday, 30th September, 1999 to the shareholders whose names appear on the register of members of the Company on Monday, 13th September, 1999, subject to the approval of the shareholders at the forthcoming Annual General Meeting.
CLOSURE OF REGISTER OF MEMBERS
The register of members of the Company will be closed from Wednesday, 8th September, 1999 to Monday, 13th September, 1999, both days inclusive, during which period no transfer of shares will be effected. In order to qualify for the proposed final dividend, all transfers accompanied by the relevant share certificates must be lodged with the Company's share registrars in Hong Kong, Central Registration Hong Kong Limited, at 17/F., Hopewell Centre, 183 Queen's Road East, Hong Kong not later than 4:00 p.m. on Tuesday, 7th September, 1999.
OPERATION REVIEW
Although 1998 had been a difficult year, the Group was able to continue to achieve profitable results. The audited consolidated profit attributable to shareholders of the Group for the year ended 31st March, 1999 amounted to HK$18,025,000 (1998 - HK$17,003,000), up 6.0% from that of previous year. Earnings per share was HK$5.55 cents, and increase of 5.9% compared to that of the last year.
The Asian financial turmoil commencing in mid 1997 has escalated in the first half of 1998 with its damaging effects continuing throughout the year. The economy of Hong Kong was therefore seriously affected, resulting in negative economic growth, rising unemployment and setbacks in property, retail and export sectors. Fortunately, the Group having re-engineered in previous years has enhanced competitive advantage in the building services industry. Accordingly, contracts and sales have been obtained at a reasonable margin in the public and private sectors.
As at 31st March, 1999, the Group's contracts on hand of which the aggregated uncompleted contract value is approximately HK$870 million while that of the last year was approximately HK$452 million. Major contracts that have been entered by the Group since the announcement of interim results of the financial year 1998/99 on 1st December, 1998 are:
-- Water Supply and Fire Services Term Maintenance Contract (Kwai Chung & Tsing Yi Region) 1999/2002 for Housing Authority's Estates, Areas and Buildings.
-- Water Supply and Fire Services Term Maintenance Contract (Wong Tai Sin Region) 1999/2002 for Housing Authority's Estates, Areas and Buildings.
-- Fire Services and Water Pump Installation for Construction of Tuen Mun Area 52 Phase 2.
-- Electrical Installation for Po Lam Housing Development Phase 2.
-- Electrical Installation for Po Lam Housing Development Phase 4.
-- Electrical Installation for Tin Shui Wai Area 110 Phase 2.
-- Electrical Installation for Tin Shui Wai Area 110 Phase 4.
-- Electrical, Fire Services and HVAC Installation for Relocation of Tuen Mun Polyclinic.
-- Provision of Airconditioning to Existing Provisional Urban Council Indoor Game Hall Phase 5 (Package A).
-- Provision of Airconditioning to Existing Provisional Urban Council Indoor Game Hall Phase 5 (Package B).
-- Chiller Replacement for stations at Quarry Bay (East), Admiralty, Diamond Hill and Yau Ma Tei for Mass Transit Railway Corporation.
BUSINESS PROSPECTS
Despite the downturn of Hong Kong's economy, the building service industry has been and will remain active since a large amount of infrastructure works will be implemented by the Government in the coming years. Additionally, private sector housing developments will gradually be picked up with the resumption of land sales by the Government since April this year. It is therefore expected that opportunities will still be available for the building services industry. With improved financial position, the Board believes that the Group is well-positioned to take advantages of such opportunities as they arise in the construction, property and infrastructure sectors and is expected to continue to perform profitably in the coming financial year.
CODE OF BEST PRACTICE
In the opinion of the directors, the Company has complied with the Code of Best Practice as set out in Appendix 14 of the Listing Rules of The Stock Exchange of Hong Kong Limited (the "Code of Best Practice") throughout the accounting year covered by the final report except that:
(i) two independent non-executive directors are not appointed for a specific term as they are subject to retirement by rotation and re-election at Annual General Meetings in accordance with Bye-law 99(A);
(ii) the Group is presently considering the establishment of audit committee in accordance with the requirements of the Code of Best Practice. Progress will be reported in the interim results announcement for the financial year 1999/2000.
THE YEAR 2000 ISSUE
The Year 2000 problem is the result of computer programs being written using two digits rather than four to define the applicable year. Any computer programs that have time-sensitive software may recognize a date using "00" as the year 1900 rather than the year 2000. This could result in a major system failure or miscalculations.
The Group has adopted the definition of Year 2000 compliance as promulgated by the British Standard Institute which, in simple terms, means neither performance nor functionality is affected by dates prior to, during and after the year 2000.
The Group has completed assessments on both computer hardware and software to ensure Year 2000 compliance. Any modifications, replacement, hardware and software upgrades being led and supervised by a key member of management staff are on schedule and are substantially completed at the year end date. The date of completion is extended to the end of September 1999 so as to upgrade the individually operated computer hardware.
The total estimated costs of the plan for Year 2000 compliance will be less than HK$1 million. The amount incurred upto 31st March, 1999 was HK$600,000 and a HK$100,000 was committed as at 31st March, 1999 in respect of Year 2000 modification costs. The costs would be recorded either as assets and amortized or as operating expenses according to the Group's underlying accounting policies. It is expected that the modification costs do not have material effect on its financial position or results of operations.
The Group has also reduced its potential exposure to the Year 2000 problem relating to our business and operation by including wording for all our newly signed subcontract documents and purchase contracts to the effect that all equipment supplied and installed shall be Year 2000 compliance.
The Group believes the Year 2000 issue has no significant impact on the Group's business operation.
PURCHASE, SALE OR REDEMPTION OF THE COMPANY'S LISTED SECURITIES
Neither the Company nor any of its subsidiaries had purchased, sold or redeemed any of the Company's listed securities during the year.
By order of the Board
James Sai Wing Wong
Chairman
Hong Kong, 20th July, 1999
website: http://www.irasia.com/listco/hk/shuncheong
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